Key finding 1: Real estate businesses cited that their key drivers for current tech investment are increasing operational efficiency and improving financial performance. Given the current market conditions, businesses remain strongly focused on cash flow management. Providing a better end-user experience is considered more of a long-term play.
Technology leaders highlight that a fundamental shift needs to take place towards the consumer and the experience of people when interacting with the built environment.
Mike Roberts, Head of UK Property from Canada Life, agrees but stresses that a people-focused strategy requires demand from tenants:
“We see the main role of proptech is to improve the customer experience and we aim to work closely with our project teams to create spaces that will stand the test of time”.
“From an investor’s perspective, creating income streams is fundamental” he continues. “Attracting tenants and retaining them is critical. If tenants start making greater demands, be it in terms of quality of space, or air quality or anything else to do with the user experience, we will have to respond to that. The reality is that right now we feel the demand is simply not there”
R&D investment has a crucial role to play in freeing up senior stakeholders’ time, allowing them to focus on strategic and investment decisions. But a large proportion of the real state sector is still very much driven by short term returns.
“When it comes to R&D,” Mike states “it is a question of justifying the expense where there is no short term return”
It is clear then that as long as an asset class continues to provide healthy returns, the time and cost commitment required for digital solutions to be researched and implemented is seen as unnecessary and regarded by some as “a bit frivolous”.
Sonny Masero, an expert in digital assets for real estate and Managing Director of GALOS Limited recognises this challenge.
“In the case of existing buildings, there usually is no central budget for smart devices, so you have to justify the technology on each individual property” he says. “When we talk about tech investment, finding a way to plot through the budgeting minefield has to be a part of that.”